Pool Corporation Q3 FY2025 earnings call

• Teams maintained momentum with top line sales up 1% and gross margin expansion of 50 basis points. - Achieved year-over-year growth in building materials since Q3 2022 driven by remodel activity and share gain. - POOL360 applications adoption continues to grow. - Shared strategic roadmap with management team, new initiatives rolling out. - Gross margin expanded due to favorable pricing, supply chain initiatives, and private label growth. - Added 2 sales centers via acquisition, 1 new Pinch A Penny store, and on track for 8-10 new sales centers by year-end.

Net sales were $1.5 billion, up 1%. Chemical sales declined 4% due to deflation, but private label offerings had volume growth. Building Materials sales increased 4% driven by private label and customer experience. Equipment sales (excluding cleaners) increased 4% from price and replacement volume. Horizon had net sales up 3% supported by maintenance growth and outdoor living products. Europe saw net sales decrease 1% in local currency but increase 6% in U.S. dollar.

• Full year sales expected to be relatively flat to up slightly. - Diluted EPS guidance range $10.81 to $11.31, updated with $0.11 in realized ASU benefits year-to-date. - Fourth quarter sales expected to be flat to slightly up, with margin expected to be up.

• Macroeconomic uncertainty around tariffs and elevated borrowing rates impacting consumer sentiment. - Consumer discretionary demand limitation for pool projects. - Weather-dependent fourth quarter performance.

Q: Diving in on comments around early signs of stabilization and trends exiting the year and into early 2026.

A: Permit data is sporadic, but activity level has firmed up with growth in building materials sales. Further interest rate cuts needed for entry-level pool buyers.

Q: On innovation spend and outgrowing the market.

A: Investments in technology to enhance customer experience, including POOL360 tools, water test technology, and at-home app. Technology suite creates competitive advantage for larger customers.

Q: On customer mix margin implications and levers.

A: Customer consolidation creates opportunity as POOLCORP's technology suite allows integration and self-service, reducing cost to serve.

Q: On chemicals, inflation, deflation.

A: Chemicals had slight deflation, building materials and equipment had slight pricing. SG&A model has upfront expense recovery with volume and incentive compensation tied to growth.

Q: On commodity pricing, trichlor deflation.

A: Trichlor has seen slight deflation, but overall chemical business is stable. PVC still seeing decline, but movement is muted.

Q: On sales guidance and margin for fourth quarter.

A: Fourth quarter sales flat to slightly up, margin expected to be up with benefits from pricing and product mix. Weather in seasonal markets impacts fourth quarter performance.

Q: On pricing sustainability and supply chain fixes.

A: Mid-season price increases fully flushed, no impact on competitor pricing. Supply chain team using AI tools, gains sustainable.

Q: On equipment early buy programs and SG&A growth.

A: Early buy programs similar to usual, SG&A growth in fourth quarter expected in 3%-4% range due to technology investments.

Q: On POOL360 adoption and future innovation.

A: POOL360 adoption growing, target higher than current rate. Focus on improving customer experience across all business facets.

Q: On HELOC rates and Analyst Day.

A: Lower HELOC rates bode well for discretionary spend, Analyst Day to showcase company focus and value proposition.

Q: On technology spend and weather benefit.

A: Technology spend not alarming, ongoing to stay competitive. Weather in seasonal markets impacts fourth quarter performance, no significant near-term weather impacts seen.